SEC Whistleblower Lawyer Blog

July 11, 2017

Despite Trump Administration Uncertainty, SEC Whistleblower Program Reports Business as Usual

Even with political clouds of uncertainty from the Trump administration, the head of U.S Securities and Exchange Commission is moving the agency full speed ahead, all the while chastising companies that retaliate or discourage their employees from blowing the whistle on possible securities violations.

Last month, Jane Norberg; the current chief of the SEC’s Office of the Whistleblower spoke on a panel at the Practising Law Institute on Corporate Whistleblowing. During the panel, she told attendees that they could expect the same level of enforcement and investigation as in years past.

Open for business

June 27, 2017

CFTC Website Launches News Portal for Whistleblower Program

by Silver Law Group

The CFTC Whistleblower program today announced the launch of a news portal, event schedule, and FAQ for its whistleblower program on its website

This new portal will contain industry news, CFTC Events and a FAQ covering the Whistleblower program and information on submitting a whistleblower tip and claiming awards based on accurate tips. The CFTC hopes this newly created section of its site will provide higher quality tips that lead to larger sanctions and more awards being paid out to tipsters.

Some of the tips for Whistleblowers suggested by the CFTC

June 13, 2017

SEC Declines Paying a Whistleblower Because the Tip Was Provided Prior to Dodd-Frank

by Silver Law Group

The SEC recently declined to pay a whistleblower award to a claimant that sought the SEC’s review of its stance on payouts stemming from information provided prior to the Dodd-Frank Act’s enactment in 2010.

In an SEC Order, the claimant provided whistleblower information to the SEC in 2007, three years before the Dodd-Frank Act. According to Rule 21F-4(b)(1)(iv), all whistleblower payouts must be based on information provided to the SEC after the enactment of the law on July 21, 2010.

The Commission relied upon a 2015 Second Circuit decision that sided with the SEC in its refusal to award a whistleblower bounty for information provided prior to 2010. The Second Circuit held that the whistleblower was ineligible for an award because the tip was provided prior to the Dodd-Frank Act

June 6, 2017

New York Settles Whistleblower-initiated Claim for $40 Million; Whistleblower Receives $8.8 Million Bounty

by Silver Law Group

New York Attorney General Eric Schneiderman announced a whistleblower-initiated $40 million settlement with Alabama-based investment firm Harbert Management Corp. over unpaid state income taxes claimed instead in lower-tax Alabama.

The dispute arose out of 2015 whistleblower allegations that members of Harbert failed to pay millions of dollars in taxes. New York law requires businesses that operate both in and out of New York to apportion taxes on income derived in New York.

The settlement alleges that Harbinger Partners Offshore Managers LLC, a $26 billion New York City hedge fund sponsored by Harbert, failed to pay certain required taxes in New York from 2004 through 2009. Instead, Harbinger paid taxes in Alabama, where rates were much lower.

May 3, 2017

SEC Awards Whistleblower a Bounty of Over $500,000

by Silver Law Group

The SEC announced it was awarding a company insider a whistleblower award of more than $500,000 for reporting information that prompted an SEC investigation into well-hidden misconduct that resulted in an SEC enforcement action.

The whistleblower award is the second award announced by the SEC in as many weeks, bringing the total amount awarded to approximately $154 million to 44 whistleblowers. Additionally, the whistleblower tips have resulted in almost $1 billion in financial remedies.

According to the SEC Order Determining Whistleblower Claim, the SEC Whistleblower Program’s Claims Review Staff recommended that the whistleblower receive an award because the whistleblower voluntarily provided original information to the SEC that led to the successful enforcement of the action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”).

April 26, 2017

SEC Awards Nearly $4 Million to Whistleblower

by Silver Law Group

The SEC announced an award of almost $4 million to a whistleblower who provided detailed, specific information about serious securities misconduct and provided ongoing assistance throughout the ensuing investigation.

According to the SEC order, the SEC recommended that the whistleblower receive an award because the individual voluntarily provided original information to the SEC that led to a successful enforcement action. Further, while the order redacted the percentage of the monetary sanctions the whistleblower would collect, the final amount was “almost $4 million.”

According to the SEC press release, the whistleblower had industry-specific knowledge and expertise, which is helpful to the SEC and can help it go through the process more efficiently.

April 26, 2017

Rule 21F-17: SEC Rule Bar Companies From Attempting to Hinder Whistleblower from Coming Forward

by Silver Law Group

When the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted in July 2010, the act implemented numerous protections for investors and consumers. One of the indirect benefits was the implementation of whistleblower laws, which allows individuals to come forward and anonymously report securities violations.

The Dodd-Frank Act not only provided an avenue for whistleblowers to come forward, the act also implemented protections, anti-retaliation provisions, and other safeguards to ensure whistleblowers could come forward with no apprehension. Many of these protections are found in Section 21F, “Whistleblower Incentives and Protection,” of the Securities Exchange Act of 1934.

The purpose of Section 21F is to encourage whistleblowers to report possible securities violations by providing, among other things, financial incentives and various confidentiality agreements. Rule 21F-17 acts as a preemptive measure to prevent individuals and companies from hindering whistleblowers from coming forward. The provision specifically states:

April 7, 2017

U.S. Supreme Court Refuses to Review Would-be Whistleblower’s Petition

by Silver Law Group

The U.S. Supreme Court declined to review a former Morgan Stanly employee’s claims that he is entitled to whistleblower protections after reporting to the FBI instead of the SEC.

According to a Law360 report, John S. Verble (CRD# 3197928), the would-be whistleblower, attempted to attain whistleblower protection after he reported illegal activity to the FBI. Verble filed an action seeking the protection in a lower court, where the court ruled that the Dodd-Frank Act’s whistleblower protections only applied to those who report to the SEC.

The Sixth Circuit, according to the report, upheld the lower court decision and dismissed claims that Morgan Stanley fired Verble in retaliation for reporting the illicit activity. The Sixth Circuit did not even consider how to interpret the Dodd-Frank whistleblower protections, as it determined Verble’s allegations of working with the FBI were too vague to state a claim for relief.

February 27, 2017

SEC Awards $7 million to Whistleblower

by Silver Law Group

The SEC announced an award of over $7 million split among three (3) whistleblower who helped the SEC litigate an investment scheme.

The SEC began their investigation when one of the whistleblowers provided a tip to the SEC. The initial whistleblower will receive more than $4 million for his initial information, per the SEC. During the SEC’s investigation, the two other whistleblowers together provided new information that significantly contributed to the SEC’s successful enforcement action. The two other whistleblowers will split more than $3 million for the information they provided to the SEC.

According to the SEC, the tips provided by various whistleblowers have resulted in almost $1 billion in financial remedies, a great amount given that the program was established less than five years ago.

February 17, 2017

How the Investment Management Firm BlackRock Undermined Whistleblower Incentives

by Silver Law Group

How the Investment Management Firm BlackRock Undermined Whistleblower Incentives on secwhistleblowerlawyers.net

Firm managing $5.1 trillion is forced to change improper employee whistleblower policy

Until recently, the world’s largest investment management firm forced ex-employees to sign away their rights to potential whistleblower awards in order to receive employee separation package payments. BlackRock, Inc., which has 30 offices in 70 countries, was charged by the SEC and fined $340,000 for the illegal policy, which is alleged to have affected more than 1,000 employees.

BlackRock’s controversial policy, which the SEC alleged was retaliation for a new rule improving whistleblower awards, isn’t the only example of a financial firm attempting to discourage current or former employees from blowing the whistle.